The company will also get an external investor to set up the renewable energy-focused asset aggregation business.
New Delhi-based Amtek Auto owes over ₹12,300 crore to its lenders.
Khazanah joins The Carlyle Group, Advent International and General Atlantic to acquire a stake in Pepe Jeans.
For Temasek, which recorded a net portfolio value of $235 billion for the year ended 31 March, the India portfolio stands at around $10 billion, with an average yearly investment of $1 billion in the last five years.
IDFC Alternatives will be the first fund to set up a company with a diversified business profile, which will include its platform investments in roads, renewables, logistics and telecom.
Following the implementation of the insolvency and bankruptcy code (IBC) in 2016, stressed assets specialists are looking for opportunities across businesses in India.
Last November, the private equity firm had entered into an agreement to acquire the company.
The bank bought the stake it did not own from US-based non-profit Accion.
The move comes at a time when most Indian banks are grappling with multiple challenges, including high non-performing assets and financial fraud.
The plan to raise money through QIP by the Ahmedabad-based company comes at a time when several road developers are accessing the capital market to raise funds.